Based on the data provided by IATA, the increasing levels of passenger traffic, lower fuel costs and higher efficiency have been the causes for better than expected financial performance in 2013. The upward trend should continue into 2014 when airlines are expected to return a net profit of $19.7B, which would make 2014 the strongest year ever in terms of net profit. However, with the demand for MRO on the rise, airlines are still struggling with profitability and new measures are needed to stem the tide.
Although the signs of economic recovery are obvious, many airlines are still operating at a loss and are taking radical steps to cut costs and increase profits. For instance, in the end of 2013 Qantas declared that it would axe at least 1000 jobs and trim the pay of its CEO, Alan Joyce, and its board as it tries to achieve cost savings of $2 billion over the next three years. In the US, United Airlines announced its plans to reduce costs by $2 billion annually, and increase its revenue by $700 million. In the meantime, Flybe, a British low-cost regional airline, has been planning to close six bases as part of its cost-cutting plan to save $139 million over the next few years. However, airlines must find other ways to claw back the cash if they are to survive. The good news is there are still areas where considerable savings can be made – most notably - MRO and data management.
Meanwhile, TeamSAI reports that globally the aviation MRO market in 2014 is expected to reach $57.7B and grow to $86.8B by 2024. At the same time, according to FL Technics, MRO may normally account for up to 20% of an airline’s operating costs. Thus, a well-chosen MRO can really help airlines to lower their cost bases by optimising the MRO structure and maintenance schedules of the fleet. That is so because various MRO-related software can provide considerable money savings to differently structured providers: as the number of aircraft being used around the globe increases, the need for efficient MRO systems and cutting edge information technology is paramount. “As a result, since 2008, the amount of MRO software vendors serving airlines, MRO facilities and OEMs has more than doubled, growing from around 20 to more than 50,” comments Andrius Norkevicius, the COO of FL Technics Engineering.
Appropriate maintenance management software solutions can help airlines to optimize all kinds of processes in order to reduce costs and maximize the availability of the fleet. As a result, airlines can plan for their material requirements which means that they can reduce their consumable and rotable stock levels, identify surplus and avoid keeping the aircraft on ground. Generally, the most up-to-date technology saves airlines time and money, easing the daily business by allowing the use of mobile devices and browsing of manuals instead of using paper-based documents while commissioning with handhelds and computerised diagnostic systems. Properly maintained and archived technical records is yet another area where additional savings can be achieved.
“There is a strong economic case against sticking to paper-based documentation and reluctance to keep records digitalized and up to date. This becomes fully obvious when the time comes to return the aircraft to its lessor. Ultimately, what we’re talking about is the difference between 3 weeks and 4 months' work,” shares Andrius Norkevicius. “For example, it is a common situation if staff is spending up to a week looking for EASA Form 1s associated with its components. However, digitalizing the records allows to find the records in a few minutes. Moreover, the records burned on a DVD are equivalent to a few dozens of three-drawer filing cabinets, so opting for digital solutions definitely saves money on storage while also offering a better access in case of the need for an extensive search.
Traditionally, the process involves a technical representative of the owner going through boxes and boxes of documents in the facilities of airlines. With the newly available IT solutions an airline can not only give the owner's representative access to the documents wherever he may be in the world, but also enable him to audit the records and approve them, or otherwise, in the program interface.
FL Technics estimates that the savings generated from having the option to process the records in advance can top $571 000 due to less man-hours required during the audits. “This is also true when trying to sell an aircraft. There have been cases when an aircraft was placed on the market to go for a couple of millions but ended up being scrapped after an audit had found too many missing or improperly cleared records. Thus, while there is still no single solution for increasing airline profitability, the market is offering an increasing amount of approaches in terms of the ability to optimize the maintenance-related data. One thing is clear, though, it is a perfect starting point for many of the industry players,” says Andrius Norkevicius, the COO of FL Technics Engineering.